A share repurchase, or share buyback, happens when a company re-acquires its own shares and returns funds to its investors.
There has been a boom in share buybacks over the years as more companies have been keen to use the strategy.
The issuing company usually acquires its own stock by distributing cash to existing holders, paying the market value per share, in exchange for a portion of the company’s outstanding equity.
When a company repurchases its own shares, this reduces the number of shares held by the public. Companies can purchase the stock on the open market or from shareholders directly.
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Most recently, Lloyds (LLOY.L) launched a £1.75bn share buyback after reporting annual profits which comfortably topped expectations.
In 2025, Shell (SHEL.L) announced a $3.5bn (£2.5bn) share buyback after its third-quarter profits beat estimates. Fellow oil major BP (BP.L) also unveiled another $750m in buybacks in its third-quarter results.
In addition, Barclays (BARC.L) announced a £500m buyback during its third-quarter earnings announcement.
Buybacks became particularly popular during the Covid pandemic as the economic fallout left companies with mounting debt piles from loans and government bailouts. Repurchasing shares enabled firms to reduce debt, shore up their finances and consolidate ownership.
Share buybacks globally hit a record $1.31tn in 2022, but then dipped back $1.11tn in 2023, according to Janus Henderson Investors.
Data from S&P 500 showed that buybacks in the first quarter of 2025 were $293.5bn, setting a quarterly record. The 12-month March 2025 expenditure was $999.2bn and was up 22.4% from the 12-month March 2024 expenditure of $816.5bn.
In addition to shoring up finances, buybacks also provide a more flexible way of returning money to shareholders as an alternative to dividends. Public companies have a goal of maximising returns for their investors, so if a firm is generating more cash than it needs to fund its operations, buybacks are a good option for excess cash.
Share repurchases also increase the company’s equity value, and help businesses to look more financially attractive to investors.
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If a board feels that its company’s stock is undervalued, buybacks are one way to solve this, and are often seen as an expression of confidence by the company.
Not only do they provide an additional exit route to shareholders when shares are undervalued or are thinly traded, but also prevent unwelcome takeover bids.
